The government, in its attempt to deal with the housing problem and in particular the lack of supply of houses for long-term leases, is considering the possibility of legislating a provision that would provide for the full exemption of property owners from income tax, in cases where they agree to make available for long-term rental properties that were kept vacant throughout 2024 or used within 2024 only for short-term rentals.
Targeted
The exemption will be granted for three years and will only apply to the rents that the owners will receive from these homes. That is, it will not apply to any other rents collected from other residences which are already long-term or short-term leased. At the same time, the increased subsidy for the “Renovate-Rent” program and the ban on issuing new Airbnb licenses in saturated areas are on the table.
POMIDA sentence
The provision for the three-year tax exemption of the rents that will be collected in the future from houses that were vacant or short-term let throughout this year, as long as they are rented with long-term contracts, had been proposed to the government since last November by the Panhellenic Federation of Property Owners (POMIDA).
As POMIDA had argued at the time, this tax intervention will not create a budgetary problem for the Ministry of National Economy and Finance, since it will concern future long-term leases and not existing ones, while at the same time it will lead to a group reintegration into the market of main residence leases, of many thousands of old and empty houses, but also of some renovated houses that have been allocated for short-term rental, without their performance justifying the expectations of the owners.
In particular, POMIDA had already proposed as early as November 2023 to add to article 38 of the Income Tax Code a provision that provides for the following:
“The amount of the undocumented deduction of repair, maintenance and renovation costs, as well as other fixed and operating costs of the property, increases from 5% to 100% of the total annual rental income, if this income comes from a new residential rental minimum three-year lease term starting from 1.1.2024 to 31.12.2026 and for the first three (3) years of each lease, as long as the residence is leased to natural persons for use as their main residence and was vacant at least throughout year 2023 or had an active short-term rental AMA in October 2023′.
Now that it has been around a year since the proposal was made, the provision will apply to homes that were empty or short-term let during 2024 and from 2025 will be made available by their owners for long-term leases.
Coefficients
As is already known, the annual income from rents, after being reduced by 5% due to the automatic deduction of operating expenses without supporting documents, is taxed independently from the first euro with a scale of rates amounting to:
* at 15% for the first 12,000 euros of annual income,
* 35% for the next 23,000 euros of income, i.e. for the part of income from 12,000.01 to 35,000 euros
* 45% for the part of the income over 35,000 euros.
Therefore, as can be seen from the detailed table of examples that we cite, especially for rents from 200 to 3,000 euros per month that property owners will collect from 2025, if they make available for long-term leases their residential buildings that were vacant or short-term leased by during 2024, the full exemption from income tax will mean benefits ranging from 28.50 to 797.50 euros per month or from 342 to 9,570 euros per year.
According to these amounts, which correspond to rates from 16.62% to 36.2%, the net rents collected by the owners will be increased in the end, without any burden on the tenants. The benefit will be great for the owners due to non-imposition of the relevant income tax.
| HOW MUCH PROPERTY OWNERS WILL BENEFIT FROM THE COMPLETE RENT EXEMPTION* | |||||||
| MONTHLY RENT AMOUNT | ANNUAL AMOUNT OF RENT | ANNUAL RENTAL TAX TODAY | MONTHLY RENT TODAY | AMOUNT OF MONTHLY RENT | MONTHLY RENT INCREASE | ||
| AFTER TAX TODAY | AFTER TAX EXEMPTION | PERCENTAGE (%) | AMOUNT (€) | ||||
| 200 | 2400 | 342 | 28,50 | 171,50 | 200 | 16,62 | 28,50 |
| 300 | 3600 | 513 | 42,75 | 257,25 | 300 | 16,62 | 42,75 |
| 400 | 4800 | 684 | 57,00 | 343,00 | 400 | 16,62 | 57,00 |
| 500 | 6000 | 855 | 71,25 | 428,75 | 500 | 16,62 | 71,25 |
| 600 | 7200 | 1026 | 85,50 | 514,50 | 600 | 16,62 | 85,50 |
| 700 | 8400 | 1197 | 99,75 | 600,25 | 700 | 16,62 | 99,75 |
| 800 | 9600 | 1368 | 114,00 | 686,00 | 800 | 16,62 | 114,00 |
| 900 | 10800 | 1539 | 128,25 | 771,75 | 900 | 16,62 | 128,25 |
| 1000 | 12000 | 1710 | 142,50 | 857,50 | 1000 | 16,62 | 142,50 |
| 1100 | 13200 | 1989 | 165,75 | 934,25 | 1100 | 17,74 | 165,75 |
| 1200 | 14400 | 2388 | 199,00 | 1001,00 | 1200 | 19,88 | 199,00 |
| 1300 | 15600 | 2787 | 232,25 | 1067,75 | 1300 | 21,75 | 232,25 |
| 1400 | 16800 | 3186 | 265,50 | 1134,50 | 1400 | 23,40 | 265,50 |
| 1500 | 18000 | 3585 | 298,75 | 1201,25 | 1500 | 24,87 | 298,75 |
| 1600 | 19200 | 3984 | 332,00 | 1268,00 | 1600 | 26,18 | 332,00 |
| 1700 | 20400 | 4383 | 365,25 | 1334,75 | 1700 | 27,36 | 365,25 |
| 1800 | 21600 | 4782 | 398,50 | 1401,50 | 1800 | 28,43 | 398,50 |
| 1900 | 22800 | 5181 | 431,75 | 1468,25 | 1900 | 29,41 | 431,75 |
| 2000 | 24000 | 5580 | 465,00 | 1535,00 | 2000 | 30,29 | 465,00 |
| 2100 | 25200 | 5979 | 498,25 | 1601,75 | 2100 | 31,11 | 498,25 |
| 2200 | 26400 | 6378 | 531,50 | 1668,50 | 2200 | 31,85 | 531,50 |
| 2300 | 27600 | 6777 | 564,75 | 1735,25 | 2300 | 32,55 | 564,75 |
| 2400 | 28800 | 7176 | 598,00 | 1802,00 | 2400 | 33,19 | 598,00 |
| 2500 | 30000 | 7575 | 631,25 | 1868,75 | 2500 | 33,78 | 631,25 |
| 2600 | 31200 | 7974 | 664,50 | 1935,50 | 2600 | 34,33 | 664,50 |
| 2700 | 32400 | 8373 | 697,75 | 2002,25 | 2700 | 34,85 | 697,75 |
| 2800 | 33600 | 8772 | 731,00 | 2069,00 | 2800 | 35,33 | 731,00 |
| 2900 | 34800 | 9171 | 764,25 | 2135,75 | 2900 | 35,78 | 764,25 |
| 3000 | 36000 | 9570 | 797,50 | 2202,50 | 3000 | 36,21 | 797,50 |
| *For vacant or short-term rental properties that will be made available for long-term rental from 2025. | |||||||
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#IRS #Bonus #rental #income #πίνακας
